50.1K

Verified Solution

Link Copied!

Please make the response detailed and easy to read, thank you

The stockholders' equity accounts of Pumpkin Corporation on January 1, 2022, were as follows.

• Preferred Stock (8%, $100 par noncumulative, 5,000 shares authorized) $ 400,000
• Common Stock ($10 stated value, 800,000 shares authorized) $ 1,500,000
• Paid-in Capital in Excess of Par ValuePreferred Stock $ 55,000
• Paid-in Capital in Excess of Stated ValueCommon Stock $ 880,000
• Retained Earnings $ 760,000
• Treasury Stock (8,000 common shares) $ (64,000)

During 2022, the corporation had the following transactions and events pertaining to its stockholders' equity.

Mar 1 Issued 6,000 new shares of common stock for $85 per share.

June 22 Purchased 1,000 additional shares of common treasury stock at $11 per share.

Sept. 1 Declared the 8% cash dividend on preferred stock, payable October 1. The date of record was Sept. 15

Oct. 1 Paid the dividend declared on September 1.

Dec. 1 Declared a $0.70 per share cash dividend to common stockholders of record on December 15, payable December 31, 2022.

Dec. 31 Determined that net income for the year was $110,000. Paid the dividend declared on December 1.

Instructions

A) Journalize the 2022 transactions listed above in proper form. Provide the date and an explanation for each. Show all calculations with an explanation.

Include entries to close net income and dividends to Retained Earnings. Assume the net income is already in income summary.

B) Prepare the stockholders' equity section of Pumpkins balance sheet as of December 31, 2022. Include all formalities and all characteristics of each class of stock.

Answer & Explanation Solved by verified expert

See Answer